Vonage enjoined from using Verizon patents; stock plummets

A federal judge today ruled that Vonage is not allowed to use some of the …

As if losing a court case dealing with Verizon VoIP patents and being ordered to pay $58 million wasn't bad enough, a federal judge has today ruled that Vonage is enjoined from making use of that technology in its products. That's bad news for the company, which will be forced to roll out some sort of alternative (and noninfringing) technology to power its system—should the injunction be enforced.

Vonage is putting its best face on the news, pointing out that the order is not immediately effective. The judge will rule in two weeks on whether to enforce the order. Even if that happens, Vonage plans to appeal the order, and it also has begun work on an appeal of the entire case.

The company continues to assert that it has not violated the patents in question. "Vonage relied on open-standard, off-the-shelf technology when developing its service," said Sharon O'Leary, the company's executive vice president. "In fact, evidence introduced in court failed to prove that Vonage relied on Verizon's VoIP technology, and instead showed that in 2003 Verizon began exploring ways to copy Vonage's technology."

The company is also at pains to assure users that it expects they will see no disruption of their phone service. The company had better start reassuring investors as well; Vonage stock plummeted like a skydiver with a chute malfunction on the news, wiping out more than 10 percent of the company's market value.